Discos will get their electricity quotas as usual but the areas generating less revenue will be subjected to more outages. The government will soon issue guidelines to Discos to link load-shedding with recoveries. PHOTO: FILE
The International Monetary Fund (IMF) has called for linking the frequency and duration of power outages across Pakistan to the recovery of bills. This, the international lender believes, will discourage rampant power theft and non-payment culture in the country.
Increasing power pilferage and non-payment of bills adds to the ‘circular debt’, which eats up the scarce public resources.
Sources familiar with the recent talks between the IMF and Pakistan told The Express Tribune that the international financial institution has added a new structural benchmark in the $6.7 billion bailout programme. According to which, the government will link the load-shedding duration with the revenues a power distribution company (Disco) collects on account of electricity bills.
The government has been asked to implement this before end of January 2014, sources added. Discos will be responsible for identifying areas for higher load-shedding, based on the recoveries from each small circle and division.
Discos will get their electricity quotas as usual but the areas generating less revenue will be subjected to more outages. The government will soon issue guidelines to Discos to link load-shedding with recoveries.
The Karachi Electricity Supply Company (KESC) is successfully implementing this model while the government has also introduced it in two cities where the recovery rate was on the decline. In Bannu, the government has ordered an increase in the frequency and duration of outages as compared to the other jurisdictions of the Peshawar Electric Supply Company (PESCO).
Pakistan and the IMF concluded the first review of the three-year bailout programme on November 8, paving the way for the approval of a second tranche of about $550 million by the Fund’s Executive Board by third week of December.
Currently, the federal government is only recognising subsidy on account of difference between the determined and notified end-consumer tariff. The difference between the tariffs determined by the National Electric Power Regulatory Authority (NEPRA) is Rs3.11 per unit higher than what the government is charging the consumers, according to an official of the Water and Power Ministry (MOWP).
For this purpose, the finance ministry has earmarked Rs240 billion power subsidy in the current fiscal year. However, the losses on account of theft and less recovery are not budgeted at present, which is again adding to the circular debt even though the government paid Rs480 billion dues in June-July.
The official said that barring the current arrears, which are to the tune of Rs40 billion, the circular debt again swelled to Rs95 billion till end of October.
At present, NEPRA is allowing Discos to recover 16.5% losses from consumers but the MOWP has allowed 22% losses and the difference between both is being added into the circular debt.
After the recent hike in power tariffs, the recovery ratio has significantly plunged underscoring that increase in rates was causing more theft.
The government has already linked load-shedding duration with the recoveries in the jurisdictions of Peshawar and Multan distribution companies, said MOWP spokesperson Zargham Ehsaq Khan.
He added that during the first quarter of the current fiscal year, the average recovery rate at the distribution level remained 82% while it dipped to 77% at the level of Central Power Purchasing Agency (CPPA).
In Balochistan, the recovery rate in September stood at less than 64%, said Khan. In Hyderabad, it was 78%, in Peshawar, 82%, in Multan, 86.6%, and in Islamabad and Lahore, the recovery rate was 89%, he added.
However, there is an underlying risk that the corrupt elements in the distribution companies may disturb the arrangement in return for kickbacks. Khan said the government was establishing a centralised load-shedding evaluation mechanism to address such complaints.
Published in The Express Tribune, November 19th, 2013.
COMMENTS (11)
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I liked this condition but instead of reducing line losses our non sense leaders will try to do some thing easy
The main problem is that KESC installs a PMT for a large space of area in which more than 10 to 15 different areas got covered. If there is theft and non recovery from an area the other 14 areas have to face load shedding. If they really want to do this then they had to install a different PMT for every colony flat and area. Each PMT costs more than 20 to 25 lacs which most people can't afford. We have also raised this issue in front of KESC but they ask a huge amount of money to separate our area from others which was not possible for us. We fall in the area of Gadap and Malir Town where load shedding is about 2 hours thrice a day, but our area falls under the recovery rate of more than 90%. Now tell us what is our fault.
US who has put Pakistan on the most watch list is to be blamed by disclosing to IMF the names of top politicians, Generals, military institutions and of course the poor people, not paying their electricity bills for many years..
@rasgullah
Just a question; what does this have to do with India at all? Like how is India even relevant here?
@Tabish Bilgrami: Not really. The capex has been incurred and still needs to be recovered. Worse, if no money is spent on routine maintenance, collections or no, the assets will deteriorate, and a bleak future will be added to a bleak present. There is no real alternative to supplying power and collecting fully. For that you need a grass-roots movement in the cause of national preservation. So either the political leaders step forward, or the whole country goes down - taking the politicos with it! If people steal power it is because they are not adequately aware of the seriousness of their act. It is not the same as stealing an end-product. When you steal power you destroy the very means to end-products.
NEPRA to approve formula. That's back to zero again. Why don't we just give the areas to IMF complete with constitution
Makes sense... Don't provide electricity where there are no recoveries....
You have identified the areas of lower recovery when the new rates came into effect only on Nov. 1. I think it is some thing else working. It could be poor law and order situation in those areas where the recovery is low. The provincial admins. have a big role in these kind of things. I think that distribution companies should be devolved to provinces. They could buy power wholesale from National grid and if they could subsidize rates or sell distribution companies to private parties under terms and conditions of their liking. After distribution is properly handled the production units should be handled in somewhat similar fashion. You also know the behavior of IMF and other big international Banks. The control the flow of capital. That is how they control smaller countries. Any financial imbalances eventually go to interest rates and exchange rates.Lower rupee may raise prices of imports and bring inflation with it. Rising domestic prices do create growth in domestic production. These things happen over two or three year time frame.Pick your medicine.
Well they can try but the difference between the KESC and the others is that the KESC is private owned so they have an incentive to improve things while the other Discos are all government owned and they couldn't care less. Also KESC took 4-5 years after privatization to improve. So this tactic will not work overnight.
And a country that got freedom at the same time sends a probe to mars.Its no use showing off Chinese hardware (which is a rip off of Russian machine) as your own when there is no industrial base to speak of.
IMF is a better manger of Pakistan's economy than our so called leaders. Our leaders only interest is to deprive the common man at every level of his existence.